The EUR/USD pair rallied in the last hour after reaching strong downside obsatcles. The Dollar Index dropped after registering only a false breakout with great separation above the 108.56 former high. DXY's sell-off forces the greenback to depreciate versus the other currencies.
You knew from my previous analyses that the currency pair could register sharp movements today and that the fundamentals could move the price. The EUR/USD pair increased as much as 1.0099 today before the US inflation publication where it has found resistance. The Euro received a helping hand from the Euro-zone Industrial Production rose by 0.8% beating the 0.2% growth expected.
As you already know, the US CPI rose by 1.3% in June versus 1.1.% growth expected and after a 1.0% growth in May, while the Core CPI surged by 0.7% versus 0.5% estimated. The currency pair crashed right after the inflation data publication and it reached 0.9997 registering a new lower low. Still, the rate failed to stay after the BOC decided to increase the Overnight Rate by 1.00% versus a 75bps forecast.
EUR/USD Rebounded!
EUR/USD found support again above the 1.0000 psychological level and now it tries to rebound and recover. The bias remains bearish as long as it stays under the lower median line (lml) and below the 1.0071 static resistance.
Escaping from the current range could bring new trading opportunities. Technically, the weekly S1 (1.0020) stands as a strong downside obstacle.
EUR/USD Outlook!
A new lower low, a valid breakdown below 1.0000 could activate more declines and could bring new selling opportunities with a potential downside target at the warning line (wl1).
A new higher high, a valid breakout above 1.0071 could activate a larger rebound and could help the buyers to go long with a potential upside target at 1.0161.
